Bone morphogenetic proteins (BMPs) are potent morphogens that have been shown to promote chondrogenic and osteogenic differentiation. This has been demonstrated in vitro, within model systems of mesenchymal stem cells, and in vivo when recombinant BMPs have been implanted or injected into ectopic, heterotopic or orthotopic sites. BMPs are also expressed at elevated levels throughout all stages of bone repair and have been shown, when exogenously administered, to enhance the healing response. Hypothesis: BMPs are critical in the regulation of all phases of fracture healing. In order to test this hypothesis, the studies proposed in this application will generate transgenic mice in which a novel experimental strategy is employed that restricts the expression of a transgene to either cartilage or bone and allows for the exogenous regulation of that transgene through systemic administration of a small molecule. Transgenic animals will be engineered to contain an artificial transcription factor encoded in two proteins, a novel DNA binding domain and an activation domain. The expression of these domains will be driven by a tissue-specific promoter (type II collagen for cartilage or osteocalcin for bone). The transcription factor will be activated by the exogenous administration of a dimerizing agent (rapamycin analog), which brings these domains into proximity. When activated, it will recognize a unique promoter which will drive the overexpression of BMP-2 or antagonize BMP function by overexpressing Noggin. Using this strategy, transgenic animals will undergo normal embryological development and fractures (or, in the case of Project 1, distraction osteogensis) will be carried out in the presence of normal skeletal function. Only upon introduction of the dimerizing agent will loss or gain of function states be induced through the overexpression of these transgenes. Fracture healing will then be analyzed in specific tissues and at specific times under conditions in which BMP function is altered. These studies will provide extensive new data concerning the specific roles that BMPs play at critical stages of fracture healing and establish a powerful model system for investigating a wide array of molecules and their effects on skeletal function.